Question

1. What kind of business/ manufacturing will you like to operate and what is your target Output per week?

Identify your Input variables such as Land, Labor, Capital, Entrepreneur required to reach that output.

Explain your combination of variables including estimate cost of each.

And also total earnung per week

Answer 1

For the manufacturing business , there are various factors that needs to be taken into consideration before starting it. The first and most important step is - Generation of idea i.e, the type or kind of product that you want to manufacture, the competition it will face and the cost it will incur.

I want to start a clothing manufacturing business.

So first i would do the market research , contact manufacturing industry experts and take consultation from them.

Next step is to estimate the target output of production. In the inital stage the production is less so my estimated target is thirty thousand output per week.

Production inputs: This includes acquiring and managing all the inventory and raw materials needed for producting and assembling it for an efficient manufacturing process.These inputs includes Land, machinery, labour, raw materials and designer for efficient production process. The inventory should be designed in such a way that the cost of production is minimum.

1. Land: for setting up the manufacturing business, this is the most important factor of production. Estimated cost is $70,000.

2. Raw material: for manufacturing clothes, different varieties of clothes are needed . So the estimated cost is :$ 10000.

3. Laours: they are most important for producting the clothes in bulk. Estimated cost is $2000.

4. Machinery: this is needed to proceed the production. Estimated cost : ₹10000

Next step is to determine the cost of production process. Tracking the variety of costs and using such information for decision making is essential for clear picture. Cost accounting helps to know the cost of per unit production. This costs include:

1.Direct cost: this cost is incurred directly in the production of the product. This includes cost for manufacturing, machinery and other important costs.

2. Indirect cost : this includes all the indirect ecpenses incurred like bussiness office, equipment etc.

3. Variable costs: this cost is the change in the total cost when the production of one or more unit is added. The cost of fuel is main example of variable cost.

4. Fixed cost : this cost does not changes with production level. These are the fixed cost like machinery, land, overhead costs etc.

Cost of one unit is set on $100.

The next step is the marketing of the product to the target audience and many suppliers so that the products are introduced to them.

Last step is to estimate the total earnings per week. This includes revenue generated from the sale of each product. So the total output produced per week is 30000 and if 20000 of sales is made then the earning will be equal to total sales * price per unit.

Total sale = 25000

price per unit = $ 100

Earning = 25000* 100= $250000